Indian government pushes banks to go rural, but will it pay?
Working out of a tiny rented room furnished with a wooden table, small biometric authentication machine and shelf stacked with passbooks, Ganesh Dangi is a one-man bank for a village of 650 people in northwestern India's desert state of Rajasthan.
A business correspondent, or local representative, for State Bank of Bikaner and Jaipur (SBBJ) in Ranchhodpura village, 40 km (25 miles) east of Udaipur city, Dangi is racing to sign up villagers to new "no frills" plans to meet a government target that every family in the district should have a bank account.
New Delhi plans to directly transfer cash payments for subsidies into these accounts, a move aimed at tackling graft in India's creaky, corruption-ridden public distribution system.
If successful, the initiative could also bring modern banking to the doorstep of rural India, a goal towards which progress has so far been fitful despite mandatory targets set by the government and Reserve Bank of India.
"Nearly 80 farmers in the village have taken crop loans. They have more confidence in banks now," says Dangi, who earns 1,500 rupees ($30) a month plus commissions. "They now know banks are not cheats to swallow up their money."
The target is a tough one in a country where only 35 percent of people had formal bank accounts, versus the global average of 50 percent, according to a financial inclusion survey by World Bank in 2011. Nearly two-thirds of India's 1.2 billion population still live in rural areas.
Currently being piloted in 20 districts, including three in Rajasthan, the
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